Four more banks under probe

June 28, 2012 10:14 pm | Updated November 16, 2021 11:41 pm IST - LONDON:

Four more global banks are being investigated for the alleged financial market manipulation that led to fines of $453 million against Barclays Bank, British Treasury chief George Osborne said on Thursday, causing stocks in those groups to plummet.

Mr. Osborne said Citigroup in the U.S., Switzerland’s UBS, and Britain’s HSBC and Royal Bank of Scotland were also being probed for allegedly providing false figures on key interest rates upon which mortgages and consumer loans are priced.

On Wednesday, U.S and British regulators imposed the fines on Barclays for manipulating the interest rate the London Inter-Bank Offered Rate (LIBOR) to its advantage between 2005 and 2009.

“Banks were clearly acting in concert,” said Andrew Tyrie, a British lawmaker, who is also chairman of the influential Treasury Committee in the House of Commons. “I fear it’s not going to be the end of the story, that we are going to find that other banks have been involved.”

Mr. Tyrie said his committee would summon Barclays chief executive Bob Diamond to explain what happened at the bank.

Though Mr. Diamond has decided to waive his 2012 bonus in the wake of the fines, he’s facing calls to step down. Prime Minister David Cameron, when asked whether Mr. Diamond should resign, said ``he thinks the whole management team have got some serious questions to answer. Let them answer those questions first.”

The massive fines are unlikely to be the end of the pain for Barclays. The cost of lawsuits related to the LIBOR scandal will likely be bigger, said Sandy Chen, banking analyst at Cenkos Securities.

“Since Royal Bank of Scotland, HSBC and Lloyds Banking Group have also been named in lawsuits, we expect they will also face significant fines and damages. We are penciling in multi—year provisions that could run into the billions,” Chen said.

0 / 0
Sign in to unlock member-only benefits!
  • Access 10 free stories every month
  • Save stories to read later
  • Access to comment on every story
  • Sign-up/manage your newsletter subscriptions with a single click
  • Get notified by email for early access to discounts & offers on our products
Sign in

Comments

Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.

We have migrated to a new commenting platform. If you are already a registered user of The Hindu and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.